Multiple Choice
If your checking account has grown from \$2,000 to \$2,500 over the course of a year, and you made no additional deposits or withdrawals, what is the net sales for the year?
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4. Merchandising Operations
Net Sales
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Which of the following has a negative impact on net sales for a company?
A
Interest income
B
Additional product sales
C
Owner's capital contributions
D
Sales returns and allowances
Verified step by step guidance1
Understand the concept of net sales: Net sales is calculated as gross sales minus sales returns, allowances, and discounts. It represents the actual revenue earned from sales after accounting for deductions.
Identify the factors that impact net sales: Sales returns and allowances reduce the gross sales figure, thereby negatively impacting net sales. These are adjustments made for returned goods or price reductions due to defects or other issues.
Analyze the options provided: Interest income, additional product sales, and owner's capital contributions do not directly affect net sales. Interest income is part of non-operating income, additional product sales increase gross sales, and owner's capital contributions are part of equity, not sales.
Focus on sales returns and allowances: Sales returns occur when customers return products, and allowances are reductions in price due to issues like defects. Both reduce the revenue recognized from sales, leading to a negative impact on net sales.
Conclude that sales returns and allowances are the correct answer: They directly reduce the gross sales figure, which in turn lowers the net sales amount for the company.
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